House of Commons - Work and Pensions

Select Committee on Work and Pensions Third Report

4 Advancement and Retention

78. A further key weakness identified by witnesses in the current welfare to work strategy was that it failed to take into account the pay and progression opportunities offered by the work obtained, or the length of time for which employment was sustained.

79. Professor Paul Gregg said that "once people have got into work, having been on benefits, we have no system to help people then".[76] Elsewhere, he has described the lack of a substantive strategy for retention and advancement as the "major weakness in the Government's approach so far."[77]

Quality of work

80. Witnesses told us that people in disadvantaged groups tended to obtain jobs which did not provide a reasonable standard of living or opportunities for progression. For example, One Parent Families told us that "evaluation of the New Deal for Lone Parents (NDLP) found that lone parents tend to enter low paid, low skilled jobs offering few opportunities for progression, including occupations in catering, cleaning, care, retail, clerical, hair and beauty therapy."[78] TAEN/Help the Aged told us that most jobs on offer were "low grade, low paid" and "without prospects of advancement."[79]

81. Amanda Ariss of the Equal Opportunities Commission told us that her organisation

"would like to see policy recognising also the very different quality of jobs that are available to people, and that people facing disadvantage in getting into work often end up being clustered in the lowest-quality jobs, with poor prospects, poor pay, and so on. Not only is that unfair to them and their families, it is a waste of skills […] We would like to see the policy agenda not looking just at the 80% target but looking at the quality of jobs, so that ethnic minority people, parents, others with caring responsibilities, have as good a chance as anybody else to have a good-quality job, to progress, and so on."[80]

82. One Parent Families stated that, unless lone parents could find jobs with reasonable pay and prospects, employment did not always represent a route out of poverty: "pushing more lone parents into work that they may not keep and that does not necessarily represent 'the best route out of poverty' will not only be expensive but unjust […] research into Britain's poorest children found that those in most hardship lived in families which had experienced one or more transitions between work and benefits."[81]

83. Underemployment is a related issue. Organisations offering support to older people in the labour market told us that the jobs available to their clients were often of an unacceptably low-skilled and unfulfilling nature, poorly suited to clients with experience and life skills to offer.[82] We heard that older people leaving one job often found it almost impossible to get another one which would make use of their skills. TAEN told us this was a particular problem for older people leaving high-level jobs: at "professional and management levels the prospects of return to work at levels of responsibility and pay comparable to prior jobs are miniscule."[83]

Progression and skills

84. To an extent, the lack of high quality jobs available to people from disadvantaged groups is inevitable, as "low quality, low pay" work will always be the easiest to obtain for those who have limited experience or skills to offer. However, what is not inevitable is that people should be trapped at this level in the long term. Instead, to make the best use of employees' skills and abilities, and tackle social exclusion and child poverty, more support is needed to help people advance from low level jobs.

85. A large factor in this will be an improvement in skills training, and this issue is looked at in more detail later in the Report, where the Leitch review of skills is considered. That review found that "Many people moving into work become trapped in low paid, entry-level work. […] Those in low paid work tend to be those with low or no qualifications. Over one quarter of all employees, almost 7 million people, have less than a Level 2 qualification."[84] Cay Stratton of the National Employment Panel told us, "Skills, and the whole investment of human capital in this, is a really important dimension, particularly if you are focused on disadvantaged people who lack language skills or basic skills and in terms of helping them not only to get the job but actually to succeed in that; over the longer term we think skills matter a lot."[85] Laurie Russell of the Wise Group agreed that, in Glasgow, "we are creating jobs at the moment [but] we need to make sure that we get our people the right skills to take up jobs, sustain jobs and then move on when they are into jobs."[86]

Retention

86. The Leitch report identified the problem of "churn" - "of the 2.4 million new Jobseeker's Allowance claims each year, around two thirds, or 1.6 million, are repeat claims."[87] If retention were to be improved, the caseload of Jobcentre Plus would be reduced and services could be delivered more effectively. This would also be a major step towards achieving the employment rate aspiration.

87. One Parent Families told us that those becoming lone parents tended to leave employment at a very high rate. They quoted a study which showed that "if lone parents had the same job exit rates as the rest of the population […] and there was no related fall in job entry rates then the target of 70 % employment of lone parents could be met without greatly raising job entry rates further."[88]

88. The Child Poverty Action Group said that it "would like to see much greater focus on sustaining people in work," and warned that "[a]n increased employment rate brought about by increased churn into and out of work amongst lower income families will not reduce poverty and may increase hardship."[89] Similarly, a TUC report stated that older workers could have difficulty retaining employment.[90]

89. Support for employee advancement and retention is not only good for the individual in work; it also benefits the employer, as Richard Cairns of Glasgow City Council explained:

"In an increasingly tight labour market we have to work on the assumption that is in the employer's best interests to have relatively low churn in the labour force because clearly the costs of finding replacement labour are higher than retaining somebody if at all possible. The other part of this, and it is particularly true in Glasgow where levels of business productivity are far lower than we would like them to be, is we have to find here a win-win relationship between investing in the individual as an employee in the business for their own career progression and ensuring that they never come back on to benefit, but investing in a fashion that delivers for their employer in terms of activity."[91]

90. Laurie Russell of the Wise Group, a charitable organisation operating in Scotland, told us about the Next Steps project which his organisation had been running:

"It is not just getting into jobs, although essentially that is the first measurement there has to be, it is how do you keep people in jobs and where do they stay, can they grow within that job financially and in terms of their skills and importance […] [we are] taking people that we are placing in jobs and working with them for a two year period in whatever way they require once they are in a job. The evidence from our first year of it, so it is still early evidence, is that we are getting a much higher proportion of people sustained in the job and a high proportion of people who are going on to take other training courses. It might just be a contact point, it might be somebody you can come in and see every now and again or speak to on the phone about issues you are facing."[92]

91. Mr Russell also told us that skills were essential: "The re-skilling part of it is crucial if we are going to have people moving and staying in jobs.[93]

92. Some measures in the New Deal Plus for Lone Parents, such as the In-Work Emergency Fund, are designed to facilitate retention (see Chapter 8) but we heard evidence that other approaches were needed. Lisa Harker told us:

"Taking some time to prepare for work but also finding the right job for the right person is worth it and it pays off in the long run […] We need to make changes within Jobcentre Plus in order to sustain people in jobs and help them progress, even if some elements of that support when people move into work could be provided by other agencies."[94]

93. It is important that support to help people retain a job once they have started work should not be too obtrusive. We heard that some people might feel embarrassed by ongoing monitoring and offers of support, and might prefer to move on quickly from their status as a jobseeker. Professor Alan MacGregor told us:

"the reality is that a lot of jobless people would not want to know about the training provider or the other organisations they have been working with after they get into a job. Who wants somebody looking over their shoulder all the time? It is about being independent and being the same as everybody else. The only way you can build that process in is to have a really good relationship with your jobless client before they get a job so that if they have a problem or they see a problem coming they come back to you, the organisation that helped them before."[95]

There is therefore a need for a sensitive approach to intervention, with a focus on building up a good relationship with jobseekers before they enter work.

Employment Retention and Advancement Demonstration project

94. One approach which merits close study is the Employment, Retention and Advancement Demonstration project (ERAD). A DWP research report explained that the project "is conceived as the 'next step' in welfare-to-work policy by continuing adviser support into the period following customers' entry to work." It offers in-work services aimed at longer-term unemployed people and some lone parents.[96] "The project will run for nearly three years, and will offer participants: "individual support from an Advancement Support Adviser (ASA) to assist them into suitable work [and] in remaining in work […] They may also receive additional cash incentives once in employment."[97] Professor Paul Gregg told us that this experiment may be showing signs of success. If true, he said then this was "really big news" and could serve as a "blueprint"[98] for advancement and retention services. We will monitor the progress of this project with interest.

95. Promoting retention does not simply mean supporting people to stay in the same job for longer. It should also involve making it easier for people to change from one job, or type of job, to another as their circumstances change. For instance, a parent may need to work a small number of hours whilst children are very young, and then may be able to move to a longer working week when they start school. TAEN/Help the Aged told us that people may wish to change job types as working lives get longer. It was important to "make a distinction between the desire to retire and the desire for change," and to work on "giving more people the choice to retire from a first career and find an alternative and do something else":[99]

"If longer working lives are to be varied and rewarding for employees, employers and the economy they cannot consist of repetitive, boring work, decade after decade. Opportunities to train throughout working life, including for those who cannot afford to pay for it, are essential."[100]

This reinforces the case for a lifelong skills strategy. Skills will be discussed further in Chapter 5.

The Demand-Led Approach

96. Cay Stratton, of the National Employment Panel, explained that, in her view, the "objective should be to move people from poverty to economic self-sufficiency; in practice this means helping individuals to get jobs that pay decent wages and offer opportunities for career progression."[101] She told us that the NEP had piloted an approach based on an occupational "pipeline", working with employers to supply them with job-ready applicants, through "Ambition" and "Fair Cities" programmes (which we analyse in further detail below). The NEP told us: "Both Ambition and Fair Cities are based on occupational "pipelines" developed in collaboration with an employer (or group of employers with the same job). Employers guarantee to interview and, in principle, hire programme graduates […] Demand-led strategies are based on the premise that the better we meet the needs of our employers, the better that we will help our clients to succeed in work."[102]

97. The NEP's memorandum explained that: "Where pipelines are effective and the jobs of sufficient quality, they can transform the lives of people in poverty. For example the Brent pilot has moved people previously claiming JSA and Income Support as well as people who are not claiming any benefit into jobs with Transport for London (at £19,000 p/a) and with Openreach at (£21,000 p/a). The pilot is also undertaking intensive work with both employers to examine their recruitment practices and define their people specifications, which stands to have a long-term impact on the diversity of their workforces."[103] Cay Stratton told us that a job with a known employer "can serve as a powerful magnet to draw disadvantaged people into work." [104]

98. The National Employment Panel's Fair Cities programme has been running in three areas since October 2005.[105] Cay Stratton, the director of the NEP, explained that it was based on a deal between employers and providers of work-related training, whereby employers commit to providing an interview or a job to candidates who present with the right skills. To design the different "supply chains" as part of the programme, Ms Stratton told us that the NEP had to "start with a careful analysis of an employer's business needs and workplace culture as well as the specific competencies of the job. We then work backwards to ensure that an individual has the requisite skills."[106] In return employers committed "to interview and, in principle, hire"[107] candidates who had completed the NEP's training programme:

"[E]ssentially employers are saying, 'If you give us qualified candidates, we will guarantee an interview, in principle we'll hire them and moreover we will work with you to shape that provision' […] and perhaps most important 'we will examine our own recruitment and HR policies to ensure that they are fair and not discriminatory.' What we are trying to do is create almost supply chains, if you will, where all the outreach is done by community organisations."[108]

99. We think that this approach is a promising one. However, the NEP also acknowledged that "[i]t is still early days in terms of the application of what we are learning to the mainstream system […] The investment in the employer relationship required to open these opportunities is significant, and for that reason it is not yet clear whether Fair Cities could be operated at significant scale."[109]

100. The Fair Cities programme was based on Ambition, which Cay Stratton described as a "learning laboratory" for demand-led programmes.[110] The Ambition pilots ran from 2002 in four areas of work: Construction, Energy, IT and Retail.[111] In the Committee's report on Efficiency Savings in Jobcentre Plus, we asked for a "clear statement of the Department's overall assessment of the success of Ambition."[112] In response, the DWP told us "the main lesson learned was the importance of focusing on employers' identified areas of skill shortages and offering Jobcentre Plus support in addressing these in partnership with employers."[113] Cay Stratton told us on 20 November that "Jobcentre Plus and the LSCs have just agreed to relaunch Ambition".[114]

101. The demand-led approach exemplified by Ambition and Fair Cities is promising, but resource-intensive. We welcome the news that Ambition is to be relaunched, and recommend that the DWP consider extending the Fair Cities programme to more areas. We recommend that the DWP explain in detail how it will incorporate lessons learned from these two programmes into other initiatives, such as the Cities Strategy.

Targets to promote retention

102. Improving retention would be a complex task, and no single measure would achieve it. However, a change in focus would be a good start. Jobcentre Plus targets focus, at present, on job entry. For contracted out Employment Zone provision, where incentive payments are made for sustainability, a sustainable job placement is defined as one which lasts at least thirteen weeks.[115] Jobcentre Plus itself does not have a direct target on job retention. Organisations told us that thirteen weeks was far too short a time for a job to be judged as truly sustainable. Frances Parry of the Employment Related Services Association (ERSA) told us:

"We want to see people going into jobs that are sustained over a really long period of time. We regard 13 weeks as being quite arbitrary, a 13-week sustainable job. At 13 weeks all those other barriers to work can often kick in, and so we would like to see longer sustainable jobs there, and we think that, if there was a skills strategy that supported that, we would see people going into jobs, being trained, sustaining that employment and progressing within that employment."[116]

103. One Plus told us that a longer length of time should be used:

"From our perspective the key measure of success is sustaining employment at 26 and 52 weeks. Lone parents in particular tend to cycle in and out of work because of the stresses placed on them in the workplace around childcare, managing children's sickness in education and that kind of thing which puts pressure on people. If you can support people in the first six months or so of employment to find ways of managing those issues then it becomes sustainable."[117]

104. The Leitch review recommends that:

"Jobcentre Plus and others delivering Welfare to Work services should still be rewarded for getting people into work. However, they should be rewarded for retention in work for at least a year. Their contribution to supporting progression includes referrals to in-work support and delivery of basic employability skills. This will give providers strong incentives to help people improve their retention and progression, including through skills improvements. The [Employment and Skills] Commission will monitor whether Jobcentre Plus is making its full contribution to sustainable employment and progression."[118]

105. Comments from the Minister for Employment and Welfare Reform, Mr Jim Murphy, suggested that the DWP might be open to the possibility of a more demanding definition of "sustainability":

"The Department has had the view that 13 weeks is about the right amount […] we are most focused on what we think will get the biggest outcome for the investment we put in, so if there is evidence that it is longer than 13 weeks and we would get the best outcome, then we would look at that."[119]

106. On the Committee's visit to New Zealand, the Ministry of Social Development explained to us how people who had been placed in jobs remained on personal advisers' casebooks, with follow-up calls and advice to ensure that a placement was working well. In New Zealand, sustainable employment "focuses on getting people into employment, spending longer periods in employment, having shorter transition periods between jobs and having the opportunity to move into higher-quality jobs over time."[120] The Ministry of Social Development introduced new result measures for sustainable employment in 2004-5, to "demonstrate the move to generating sustainable employment outcomes for the Ministry's clients."[121] The new measure refers to an aim of "six months continuous employment."[122] Such a shift in focus in the UK could help contribute to a higher employment rate.

107. Andrew Harrop, of Age Concern, said that the role of Government in promoting retention should be more strategic and less direct than its role in helping people enter work. The focus should be on "getting the right employer/employee relationship, particularly in terms of reinvesting in people's skills throughout their careers and in terms of occupational health so that people with emerging health issues are able to stay in the workplace rather than being forced to leave work."[123] Age Concern also suggested that:

"Existing initiatives and pilots need to be transformed into a integrated, clearly understood package that includes: access to personal advisers who understand the needs of employees and employers; support in taking-up training, making use of the 50 Plus Training Grant and the new Train to Gain programme; support with occupational health needs; transparent financial incentives through return-to-work credits and tax credits. Targets and funding need to reflect the priorities of retention, in-work training and progression."[124]

108. Jobcentre Plus focuses on placing people into jobs. However, it is our view that not enough attention is being paid either to ensuring that those jobs offer reasonable prospects, or to helping people remain in those jobs in the long term. In particular, the absence of targets for sustained job placements in Jobcentre Plus provision, and the definition of a sustained job placement as one lasting 13 weeks in contracted out provision, need to be re-examined. Lesley Strathie, Chief Executive of Jobcentre Plus, told us:

"For people who have been very, very long-term unemployed and have spent more years on welfare benefit than in work, our aspiration is to get them into sustainable jobs. I think the labour market has changed quite a lot, in terms of what is sustainable, and people now, on average, will have something like seven jobs in their careers, where they had one in the past; that is just one statistic on the change. I think six months is a good point […]"[125]

109. We recommend that the DWP should use a new definition of sustainable employment of 26 weeks, both in its targets for Jobcentre Plus and contracted-out provision. We also recommend that the Government liaise with employers organisations to promote sustainable employment.

76 Q 341 Back

77 Gregg P, Harkness S and McMillan L, Welfare to work policies and child poverty, Joseph Rowntree Foundation, University of Bristol 2006, p 79 Back

78 Ev 188 Back

79 Ev 147 Back

80 Q 166 Back

81 Ev 188 Back

82 Ev 197, Ev 147 Back

83 Ev 147 Back

84 HM Treasury, Prosperity for all in the global economy: world class skills, TSO, December 2006 p.118 Back

85 Q 130 Back

86 Q 1 Back

87 HM Treasury, Prosperity for all in the global economy: world class skills, p.118 Back